Huw Jones

LONDON, (Reuters) – The last batch of rules for bank capital following the financial crisis will be implemented in Britain prior to or concurrently with the European Union’s. This was announced Tuesday by Sam Woods, Deputy Governor at Bank of England.

Brussels proposed that the final rules be introduced in 2025. That is 2 years later than the international Basel Committee agreed to. These stricter capital standards were established after taxpayers bailed out lenders more than 10 years ago.

Basel delayed their implementation by one year until January 2023, in an effort to give banks the time they need to get over the COVID-19 pandemic.

Woods stated at a Financial Times conference that the BoE will not release its final proposals to implement the rules before the second half next year. This makes it impossible for Basel to meet the January 2023 deadline.

Woods declared, “I would have been extremely disappointed if our timing was behind that of the EU in our implementation. And I don’t expect that.”

“The only thing that matters is whether we are in front or behind the curve at the same moment.”

Banks which used London to be their European base face pressure from the European Central Bank for them to transfer more people and activities to new Brexit hubs within the EU.

Many branches of EU banks have their headquarters in London, but Woods stated that he is not involved in “tit-fortat” games. However, he said it would not be acceptable to reduce UK-based banks as empty shells.

Woods explained that “we do have to watch it moving forward.”

However, he accepted that a formal remit would be necessary to preserve the global competitiveness of London post-Brexit as a financial hub when establishing financial rules.

British authorities have suggested that BoE rules should be adjusted to allow for growth and competition in addition to their main mandate of protecting banks and insurance companies.

“What has been proposed by the government… It is actually quite reasonable, I think. Woods stated that he believes this will work out well. People shouldn’t expect us to reduce standards following Brexit. It is not our intention.

Woods stated that banks in Britain have enough capital to weather worse outcomes than what the BoE anticipates. Woods also said that a repetition of last year’s ban on bank dividends during the peak of the pandemic is unlikely.